Warner Bros Wins ‘Hobbit’ Profits Battle Over Weinsteins

EXCLUSIVE: The arbitrator in the legal battle over Middle Earth money made his decision today, and Bob and Harvey Weinstein were not the lucky ones. Warner Bros has won the fight over profits fromThe Hobbit sequels, I have learned, after the Weinsteins filed a $75 million lawsuit late last year that was eventually moved behind closed doors. Contacted by Deadline, Warner Bros had no comment on the arbitration ruling. Former NY Supreme Court Justice Bernard Fried was the arbitrator in the matter.

The Weinsteins, Miramax and their attorneys had recently tried to get an evidentiary hearing to fully explain their argument that while the contract in dispute exclude remakes, their case boiled down to the way the picture was produced. They maintained that even though The Hobbit–originally envisioned by director Peter Jackson and Warner Bros as two installments culled from one book–was turned into three movies doesn’t change the fact that the film is one long story, filmed primarily in one production shoot. I hear that they feared that a former New York judge wouldn’t have the familiar grasp of how Hollywood works. That claim clearly fell on deaf ears and the judgment came down but I’m told this might not yet be over and that there were technical discoveries rendered in this arbitration decision that will likely prompt a detailed audit into the entire disposition of revenues from the JRR Tolkien works. The Weinsteins had no immediate comment.

Last December, the Weinstens and Miramax filed a breach of contract complaint against WB Entertainment and New Line Cinema claiming that they were owed big bucks from the property they helped develop back in the 1990s. “Warner’s position is simply an improper attempt to deprive the people originally responsible for hugely successful films being made from the works of J.R.R. Tolkien of their right to share in revenue from two of the three filmed installments of Tolkien’s The Hobbit,” said the dense 8-page filing. Of course, WB took a very different stance over a property that has come with other legal troubles and big big franchise profits. “Fifteen years ago Miramax, run by the Weinstein brothers, sold its rights in The Hobbit to New Line,” the company said in a statement after the brothers and Mirmax filed their complaint. “No amount of trying to rewrite history can change that fact. They agreed to be paid only on the first motion picture based on The Hobbit. And that’s all they’re owed.”

The Hobbit: An Unexpected Journey came out in mid-December 2012 and went on to make over $1 billion at the box office. Of that big chunk of change, the Weinsteins made just over $12 million AKA 2.5% of first dollar gross based on the 1998 deal that gave them a financial taste of any first Hobbit pic. Miramax got another 2.5%.

This being Hollywood, timing, as well as money, has also proved a factor in the matter. Last year’s complaint came just days before the Peter Jackson helmed The Hobbit: Desolation of Smaug debuted. Today’s decision comes just over a month before The Hobbit: The Battle of the Five Armies opens on December 17.

After the initial filing of the complaint last year, there was the usual jockeying for position on both sides. Eventually, as WB and New Line had always insisted, it ended before a mutually chosen arbitrator. And now the matter is seemingly done.